Assessing member health risk has become a critical need of healthcare organizations. An individual's health risk or “illness burden” is a measure of the relative resources expected to be required for their medical care. It can vary for a number of reasons, including a person's current health, genetic make-up, socio-economic status, and environment. Whether to support accurate payment rates, meaningful comparisons of provider performance, or the identification of patients of highest risk, sound methods of health risk assessment are an important tool for any health care organization.
Adjusting for differences in health risk can be thought of as a two-step process. The first step, risk assessment, involves the measurement of the expected health care costs or utilization of an individual or groups of individuals. Risk adjustment is the mechanism for adjusting for differences in risk, as measured by the risk assessment. In all applications, risk adjustment will only be as good as the underlying risk assessment method. There is a need for a new approach to health risk assessment.